The Swiss banking industry is one of the largest in the world and its prominence leans on the political and economic stability of Switzerland and the confidentiality of the Swiss banking system.
The expansion of banking activities in the 20th century stems from international financial activities of Swiss banks, and the country’s role as an key international banking destination was raised by the First World War.
During the course of the Second World War, Switzerland rendered its financial services particularly to Germany, which was purchasing gold and exchanging it into Swiss francs, as it secured strategic materials from neutral nations.
By 1960, Switzerland had rose into one of the world’s most important financial destinations, and its total stock sky rocketed due to influx of foreign transactions.
This banking and wealth management role also helped in elevating the country’s reputation abroad, catapulated in the early days by the country’s neutrality during the world wars. This in turn had facilitated the entry of foreign capital into Swiss banks, and set its banking industry onto an opulent path to prominence.
The Swiss banking sector is symbolized by its stability and discretion thanks to the strictly confidential banking practices which go back to the middle ages. It is warranted by Article 47 of the Law on banks, which forbids officials of a financial institution to divulge any private information of one of its clients.
However, this privacy may be overturned during a procedure for international legal assistance, for Switzerland this discretion boosts the inflow of new capital.
Although Switzerland is generally not regarded as a tax haven, multitudes of people prefer to stay in Switzerland for tax benefit packages remitted in place of taxes on ordinary income and capital, depended on the expenditures of a taxpayer .
In essence, the Swiss authorities reckon that this package should at any rate constitute five times the annual rental expenditure of the subject individual. And those obtaining a lump-sum taxation should not work and also collect a fee in the European country.
All financial institutions in Switzerland are regulated by the Federal Supervisory Authority for Financial Markets (FINMA). The body takes the form of a public institution and is subject to political supervision and additionally, an ombudsman is available offering offers free mediation services.
In 2006, up to four hundred banks were given permission to conduct business in the territory Switzerland. Together with twenty-four cantonal banks, semi-public institutions operated by a local canton, active in all areas of banking.